Patent Innovations- Berkeley-Lavian 3 rd week 1 Patent Engineering IEOR 190G CET: Center for Entrepreneurship &Technology 3rd Week Dr. Tal Lavian (408) A Bechtel Mondays 4:00-5:45

Patent Innovations- Berkeley-Lavian 3rd week 2 Students Presentations Students’ presentations Topics on patent engineering in litigated cases Some examples from last semester:

Patent Innovations- Berkeley-Lavian 3rd week 3 Students Presentations Present in min a patent litigation case Case summary Parties, dates, history, issue in dispute, results Engineering aspects of the dispute The patent(s), technology, product Engineering aspects of the infringement The engineering view vs. the legal view Any proposed design around The iPod touch screen patent –Need 4 volunteers

Patent Innovations- Berkeley-Lavian 3rd week 4 Recent Patent Verdicts & Settlements Or – Why it is really important? Alcatel/ Lucent v. Microsoft. - (2007) - $1.5 Billion NTP – Settled with RIM for $612M (plus $53M litigation plus verdict) Intergraph – over $880M in settlement from patent litigation with Intel, HP and others Eolas v. Microsoft (2003). $506M Jury verdict Immersion v. Sony (2004). $82M jury verdict plus royalties –increased (2007) to $150M –vibration game controller - Microsoft settlement on $26 Freedom Wireless v. BCGI (2005) $128 jury verdict Finisar v DirectTV (2006). 103M (79+24)Jury verdict plus injunction Tivo v. EchoStar (2006). $74M jury verdict plus injunction Acacia - $60M in licensing revenue (2004-2—6) Forgent - $100M in licensing revenue

Bell Labs Case - The Technology  Late 1980’s, Inventors James Johnston and Joseph Hall (Bell Labs, division of AT&T)  Quantizing noise – approximation of continuous range by values by relatively small set of discrete values.  Invented method and apparatus to produce quantized audio signal using interpolated scale factor. V. Advantage - Data compression – Same or similar signal can be represented with less data

Bell Labs Patents Filed: Dec 1988 Assignee: Bell Laboratories U.S. Patent No. 5,341,457, Perceptual Coding of Audio Signals, to Joseph L. Hall and James D. Johnston (Dec 1988) U.S. Reissue Patent No. RE39,080, Rate loop processor for perceptual encoder/decoder, to James D. Johnston (Dec 1988, Reissued Sep 1994)

Bell Labs MS Case In 2003, Lucent files suit against Gateway, Dell, and eventually Microsoft in U.S. District Court, San Diego, CA. Claim: Infringed two patents developed by Bell Labs in MP3 compression and playback within Microsoft Windows Media Player Sought 0.5% royalty of total Windows computers sold

The Case Microsoft claims: Received license for MP3 technology from Fraunhofer Institute (Bell Lab’s parent research organization) for flat $17 million. Loop processor not applicable for WMP application. 0.5% rate exorbitant! “Only one of 10,000 features” The Proportioned Doctrine.

The Results Ruling agreed that patents were developed by Bell Labs before joining with Fraunhofer to create MP3 Rights to patents exceeded value of $17 million paid for license February 22, 2007, Alcatel-Lucent awarded record $1.5 billion in damages from Microsoft. Jury unable to find ‘willful’ infringement for $4.5 billion damages. August 6, 2007, Microsoft granted retrial. Verdict overturned based on insufficient evidence by Judge Rudi Brewster..

PatentEng-Berkeley-Lavian 3rd week 10 Patent History Created by Congress in 1790 –“…to promote the progress of science and the useful arts by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.” Article 1, Section 8 July 31, 1790 – 1 st Patent –Samuel Hopkins patents potash –Cost : $4.00 Reviewed by Cabinet Members –Thomas Jefferson – Secretary of State –Henry Knox – Secretary of War –Edmund Randolph – Attorney General –George Washington – President

PatentEng-Berkeley-Lavian 3rd week 11 More Patent History 3 Patents Awarded in 1790 –First patent law enacted 1802 – US Patent and Trademark Office Created –Responsibility of granting patents/registering trademarks Atomic Energy Act of 1954 –Excludes nuclear purposes/atomic weapons American Inventors Protection Act (1999) –Most recent revision of patent laws New Legislation debate –

PatentEng-Berkeley-Lavian 3rd week 12 US Constitution Rights are derived directly from US constitution, Article 1, section 8 –granting congress the power to promote the progress of science and useful arts by securing for a limited time to authors and inventors the exclusive rights to their respective writings and discoveries

PatentEng-Berkeley-Lavian 3rd week 13 What is a Patent? A form of intellectual property A grant of property right to an inventor by the government Prevents the invention from others for the duration of the patent In return, the inventor must fully disclose the details of the invention to the public

PatentEng-Berkeley-Lavian 3rd week 14 What is a Patent? (Cont.) Right to Exclude the Making, Using, Selling, Offering for Sale or Importation of a Specified Invention –Limited Time (Typically 20 Years from date of filing with USPTO) –Limited Geographic Territory (issuing country) Monopoly awarded by the Government for sharing the Invention with the public

PatentEng-Berkeley-Lavian 3rd week 15 Protecting the Idea Protecting the idea, not the embodiment Allowed to claim broader than the physical embodiment Protection: –Limited rights during the life of the patent Filing to end Issue to end

PatentEng-Berkeley-Lavian 3rd week 16 What can be patented? “Everything under the sun made by man.” –Products: things –Processes: ways to make things –Methods: ways to do things –Improvements: better things Defined Classes – Article of Manufacture – Machine – Composition – Process Some more: –Business Methods –Services –Software

PatentEng-Berkeley-Lavian 3rd week 17 Criteria – Legal Standards Novelty – Does not exist in the prior art – Not previously disclosed to public – OK if Modification/Improvement of an existing product/process, or use of something “old” in new/different way Usefulness - Utility - Performs a useful function Non-obviousness – Non-trivial - It would not have been obvious to one skilled in the art to combine multiple items in the public domain to arrive at or show the invention – Not Engineer’s normal sense of “obviousness”! Enabled

PatentEng-Berkeley-Lavian 3rd week 18 What Is Not Patentable Laws of nature (wind, gravity) Physical phenomena (sand, water) Abstract ideas (mathematics, a philosophy) –Algorithms per se Anything not useful, Novel and Non- Obvious (perpetual motion machine) Inventions which are offensive to public morality or designed for an illegal activity

PatentEng-Berkeley-Lavian 3rd week 19 Novelty First to invent (vs. first to file) Conception –the conceiving of the idea of the invention Reduction to Practice –the construction or testing of the invention (actual) –or the filing of a patent application (constructive)

PatentEng-Berkeley-Lavian 3rd week 20 Statutory Bars Patent rights to an invention will be lost if: –The invention is used publicly –The invention is sold or offered for sale –The invention is published in a printed publication or a patent –Before the filing of a patent application (more than one year in U.S.)

PatentEng-Berkeley-Lavian 3rd week 21 Prior Art Information prior to the date of a patent application Existing relevant technology Can be your own technology or acts

PatentEng-Berkeley-Lavian 3rd week 22 Foreign Standards fro Prior Art “Absolute novelty” The invention must not have been disclosed or available to the public at any time before the filing of the application

PatentEng-Berkeley-Lavian 3rd week 23 Obviousness A patent may not be obtained if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art The obviousness standard prevents the patenting of relatively insignificant differences between the invention and the prior art How much this is true?

PatentEng-Berkeley-Lavian 3rd week 24 Obviousness (cont’d) Prior art can be combined in an obviousness determination, that is, more than one reference can be cited by the examiner as showing different features of the invention which, taken together, render the invention obvious Obviousness is inherently a subjective determination, as the examiner cannot be, or know the mind of, the hypothetical “one skilled in the art.”

PatentEng-Berkeley-Lavian 3rd week 25 Utility The invention must satisfy the “useful” requirement of the patent laws This is easy requirement for high-tech inventions The patent system was created as a reward for inventive contributions to society, not for merely creative ideas that have no application

PatentEng-Berkeley-Lavian 3rd week 26 Utility Patents What is patentable? New and useful… –Process –Machine –Manufacture –Composition of matter –Improvements What is unpatentable? –Prior existing technology

PatentEng-Berkeley-Lavian 3rd week 27 Utility Patent Types Two types of US Utility Patents –Provisional application –Non-Provisional application Continuation Divisional CIP PCT International

PatentEng-Berkeley-Lavian 3rd week 28 Other Types of Patents Design Patents: are issued for – Novel, non-obvious –Ornamental design in an article of manufacture –In other words, for its appearance –The term of a design patent is 14 years from the date of grant Plant Patent –new or discovered a sexually reproduced plant

PatentEng-Berkeley-Lavian 3rd week 29 Types of Patents TypeIs for Term#s Utility Function, use20 years6,214,874 Design Appearance14 yearsD202,331 Plant Asexually reproduced 20 yearsPP10123